Moving Toward a Drug Development Boon or Bust?

The implications of the economic and financial downturn on drug development and outsourcing was an important theme at DCAT Week, the annual gathering of the Drug, Chemical, and Associated Technologies Association (DCAT). DCAT consists of companies that manufacture, distribute, or provide services to the pharmaceutical, chemical, and nutritional industries.

Patricia Van Arnum

Tightening credit and financing into small- and medium-sized pharmaceutical companies is reducing the number of drug candidates and is forcing companies to proceed in a step-wise fashion in development and in outsourcing work related to those projects. As one small pharma company observed: "The days of getting a multimillion dollar deal to fund development are over. Investors are making smaller investments and waiting to see how the project progresses before further investing. We have to proceed accordingly."

Short-term caution is one effect, but there is also long-term impact. Fewer projects in early-phase development translate into less candidates going forward and casts an obvious shadow on future outsourcing not only from the small to medium-sized companies, but also from the large pharmaceutical companies. Big Pharma is seeing attractive prices for smaller drug companies. Although potential acquisitions will save certain drug candidates from the financial chopping block, further attrition is likely as these smaller companies' portfolios are absorbed and evaluated in Big Pharma's pipeline. The ripple effect from this smaller pool of drug candidates bodes ominously for future outsourcing.

Patricia Van Arnum is a senior editor of Pharmaceutical Technology.